DIRECTORS' REPORT
Eesti Ehitus is a group of construction companies whose core business is
general
contracting and project management. Group entities are involved in the
construction of buildings and civil engineering in Estonia, Latvia,
Lithuania
and Ukraine. In addition, in Estonia our companies act as
independent
contractors in road construction and maintenance,
environmental engineering, the
assembly of reinforced concrete elements, and
the performance of cast-on-site
concrete works. The parent of the Group is
AS Eesti Ehitus, a company registered
and located in Tallinn, Estonia. Since
18 May 2006, the parent company's shares
have been quoted in the main list of
the NASDAQ OMX Tallinn Stock Exchange.
Our mission
We are committed to providing
premier value added design and construction
services by creating a
successful partnership with our customers.
We seek to add value
to the company by motivating our employees and providing
them with clear
development opportunities and a contemporary work environment.
Our vision
We strive
to be a construction group that can always surpass the customer's
expectations.
Shared values
Quality
We are professionals - we apply appropriate and effective
construction
techniques and technologies and observe generally
accepted quality standards. We
provide our customers with integrated cost
efficient solutions. We are
environmentally aware and operate
sustainably. We value our employees by
providing them with a modern
work environment that encourages creativity and a
motivation system that
fosters initiative.
Reliability
We always keep
our promises and honour our agreements. We act openly and
transparently. We consistently support and promote the best construction
practices. We do not take risks at the expense of our customers.
Innovation
We are innovative and creative engineers. We take maximum advantage
of the
benefits offered by information technology. We inspire our
employees to grow
through continuous training and balanced career
opportunities.
The structure and business of Eesti
Ehitus Group
The unaudited consolidated
financial statements for the twelve months ended 31
December 2008 comprise
the parent AS Eesti Ehitus and the parent's interests in
the following Group
entities:
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|
Direct and indirect ownership interests of AS Eesti Ehitus
|
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|
Company | Domicile | 31 December | 31 December 2007
|
| | | 2008 |
|
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|
AS Linnaehitus | Estonia | 100.0% | 100.0%
|
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|
AS Aspi | Estonia | 100.0% | 100.0%
|
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AS Järva Teed | Estonia | 100.0% | 100.0%
|
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OÜ Hiiu Teed | Estonia | 100.0% | 100.0%
|
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Estcon OY | Finland | 100.0% | 100.0%
|
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OÜ EE Ressursid | Estonia | 100.0% | 100.0%
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UAB Eurocon LT | Lithuania | 70.0% | 70.0%
|
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OÜ Kaurits | Estonia | 66.0% | 52.0%
|
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Infra Ehitus OÜ | Estonia | 66.0% | 52.0%
|
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OÜ Eurocon | Estonia | 63.0% | 64.0%
|
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Eurocon Ukraine TOV | Ukraine | 63.0% | 61.4%
|
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TOV Eurocon West | Ukraine | 63.0% | 61.4%
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Instar Property OÜ | Estonia | 63.0% | 0%
|
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TOV Instar Property | Ukraine | 63.0% | 0%
|
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TOV Bukovina | Ukraine | 62.4% | 60.8%
|
| Developments | | |
|
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SIA Abagars | Latvia | 56.0% | 34.3%
|
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SIA Vides Tikli | Latvia | 56.0% | 34.3%
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TOV MP Ukraine | Ukraine | 52.6% | 0%
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OÜ Mapri Projekt | Estonia | 52.0% | 52.0%
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AS Eston Ehitus | Estonia | 52.0% | 52.0%
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OÜ DSN Ehitusmasinad | Estonia | 43.6% | 34.3%
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TOV EA Reng Proekt | Ukraine | 32.1% | 31.3%
|
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TOV Technopolis-2 | Ukraine | 31.5% | 30.7%
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P/S BKT | Latvia | 28.0% | 17.2%
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TOV V.I. Center | Ukraine | 27.7% | 32.0%
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OÜ Kastani Kinnisvara | Estonia | 26.0% | 26.0%
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OÜ Sepavara | Estonia | 26.0% | 26.0%
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OÜ Kalda Kodu | Estonia | 22.9% | 22.9%
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OÜ Crislivnica | Estonia | 17.7% | 17.7%
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AS E-Trading | Estonia | 6.2% | 6.2%
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TOV Passage Theatre | Ukraine | 1.9% | 17.8%
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TOV European House | Ukraine | 0% | 6.1%
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TOV Baltik Development | Ukraine | 0% | 30.7%
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The
business of Group entities
The Estonian subsidiaries of Eesti Ehitus Group provide services in all
business
segments in which the Group is involved. The parent AS Eesti Ehitus,
AS
Linnaehitus and AS Eston Ehitus are mainly engaged in general
contracting and
project management. AS Aspi and its subsidiaries build
environmental structures
and roads and provide road maintenance services. In
addition, Aspi group
includes companies (OÜ Kaurits and OÜ DSN
Ehitusmasinad) that sell and rent out
construction machinery and equipment.
The core activities of OÜ Mapri Projekt
are concrete works and general
construction contracting.
The Group's Ukrainian
subsidiaries operate mainly in the residential and
non-residential
segment. The largest Ukrainian subsidiaries Eurocon Ukraine TOV
and TOV
Eurocon West build mostly commercial buildings and industrial and
warehouse facilities. TOV EA Reng Proekt provides design services. Other
Ukrainian subsidiaries are involved in real estate development and
construction
projects in Kiev and Lvov.
The Latvian subsidiary, SIA Abagars, and its subsidiaries
perform mostly
infrastructure projects (such as the construction of
pipelines beneath roads,
etc) in the civil engineering segment.
The Lithuanian subsidiary UAB Eurocon LT
operates in the residential and
non-residential segment, focusing on
the construction of residential and
commercial premises.
Changes in the Group's
structure in 2008
Acquisitions of
interests and establishment of subsidiaries
On 5
February, AS Eesti Ehitus' subsidiary OÜ Eurocon acquired a 4 per cent
stake in Eurocon Ukraine TOV, raising its interest in the entity to 100 per
cent.
On 12 February, AS Eesti Ehitus acquired a 2.5 per cent stake in OÜ
Eurocon from
a minority shareholder, increasing its holding in OÜ Eurocon to
66.5 per cent.
On 18 February, OÜ Eurocon established a wholly-owned
subsidiary - Instar
Property OÜ. At the date of establishment, the
share capital of Instar Property
OÜ was 40,000 kroons (approx. 2,557 euros).
Instar Property OÜ operates as a
holding company for the Group's direct
and indirect interests in the Ukrainian
development projects.
On 2 May, AS Eesti Ehitus'
wholly-owned subsidiary AS Aspi performed a
transaction with its
subsidiary OÜ Kaurits, acquiring a 56 per cent interest in
the Latvian entity
SIA Abagars. After the transaction, AS Aspi's direct interest
in SIA Abagars
is 56 per cent.
On 19 May,
AS Aspi increased its shareholding in OÜ Kaurits by 14 per cent to 66
per
cent.
On 8 September 2008, OÜ Mapri Projekt (a 52 per cent subsidiary of AS Eesti
Ehitus) and Eurocon Ukraine TOV (a wholly-owned subsidiary of OÜ Eurocon,
which
is a 63 per cent subsidiary of AS Eesti Ehitus) established TOV MP
Ukraine, a
company domiciled in Ukraine. The ownership interest of OÜ Mapri
Projekt is 95
per cent and that of Eurocon Ukraine TOV 5 per cent.
Interests acquired and subsidiaries established after the
balance sheet date
In December 2008, AS Aspi's Latvian subsidiary SIA
Abagars performed a share
purchase transaction by which it acquired a 75
per cent stake in the Latvian
company SIA LCB. Ownership of the shares
transferred in January 2009. Since AS
Aspi's ownership interest in SIA
Abagars is 56 per cent, the transaction
provided AS Aspi with a 42 per
cent interest in SIA LCB.
In January 2009, AS Eesti
Ehitus signed a share purchase agreement by which it
acquired a 56 per cent
stake in OÜ Kalda Kodu, an entity registered in Estonia.
The remaining 44 per
cent of the entity was already held by AS Eston Ehitus, a
52 per cent
subsidiary of AS Eesti Ehitus. Thus, after the transaction AS Eesti
Ehitus
holds (through its direct and indirect investments) 79 per cent of the
shares in OÜ Kalda Kodu.
Divestment of investments
On 4 April, AS Eesti Ehitus sold a 4 per cent interest in OÜ Eurocon
to a
Ukrainian resident. The transaction was performed by increasing
share capital.
On 10 April, AS Eesti Ehitus' subsidiary Eurocon Ukraine
TOV divested a 33 per
cent stake in the Ukrainian company TOV Passage
Theatre.
On 14 April, Eurocon Ukraine TOV divested a
50 per cent stake in the Ukrainian
company TOV Baltic Development.
In June, Eurocon Ukraine TOV signed
an agreement in which it undertook to sell
its entire 10 per cent interest
in the Ukrainian company TOV European House. By
30 September 2008, all terms
and conditions of the sales agreement had been
satisfied and AS Eesti
Ehitus had no ownership interest in TOV European House.
In June, Eurocon
Ukraine TOV sold a 30 per cent stake in the Ukrainian company
TOV Passage
Theatre, which had already been classified as a non-current asset
held for
sale, making its interest in TOV Passage Theatre 27 per cent.
In
September, OÜ Eurocon sold 8 per cent of its interest in the Ukrainian
property development company TOV V.I. Center. The transaction reduced AS
Eesti
Ehitus' ownership interest in TOV V.I. Center to 28 per cent.
In December, Eurocon Ukraine TOV signed an agreement by which it
sold 24 per
cent of its interest in the Ukrainian company TOV Passage
Theatre, reducing its
stake in the entity to 3 per cent.
Changes in the Group's management in 2009
In April 2008, the board of AS Eesti Ehitus
launched a review of the Group's
development strategy in order to map the
current state of the Group's operations
and markets and to update the Group's
development plan for the period 2009-2013.
The board decided that in the first
phase of the process the parent company's
management structure should be
changed.
In designing the new
management structure, the board considered the following
factors:
-The
construction market and the general economic environment have undergone
significant changes that have a direct impact on the Group's performance,
calling for extensive operational adjustments both at the level of the
Group and
the level of each individual entity.
-Group entities are becoming increasingly specialised.
Aggregating all
available
expertise and skill under single leadership will
allow tapping their competitive
advantages more effectively.
-Clearer design and further centralisation
of Group-wide support services will
enhance overall operating efficiency.
-Alterations in group entities'
management structures will help consolidate the
Group's position in a taxing
market situation, sustaining development during the
period 2009-2013.
-The Group has to
continue expanding its core operations in selected foreign
markets.
In the light
of the above considerations and in response to the board's request,
in
November 2008 the council of AS Eesti Ehitus decided to change the Group's
management structure. The following resolutions were adopted:
-To recall early members of the board of AS Eesti Ehitus Avo Ambur
(Development
Director) and Priit Pluutus (Technical Director) and to end
their terms of
office as of 31 December 2008.
-To consider the term of office of the member of the
board of AS Eesti Ehitus
Erkki Suurorg (Construction Director) ended as of
its scheduled expiry, i.e. 30
November 2008.
-To appoint Priit Tiru, the former chairman
of the board of the Group's
subsidiary AS Linnaehitus, as a member of the
board of AS Eesti Ehitus (Director
of Building Construction), effective from 5
January 2009.
Jaano Vink will continue as chairman of
the board of AS Eesti Ehitus and Sulev
Luiga will continue as a member of
the board (Finance Director). In addition, on
5 January 2009 Margus Vaim, the
former chairman of the board of AS Aspi, was
appointed as Director of
Engineering.
In the future
members of the board Jaano Vink and Sulev Luiga will focus on
developing
the Group as a whole and improving the efficiency of Group-wide
centralised support services whereas the member of the board Priit Tiru and
director Margus Vaim will be responsible for the strategic management and
development of the Group's core activities and foreign expansion in their
respective lines of business (building construction and civil
engineering).
Former members of the board Avo Ambur, Priit Pluutus and
Erkki Suurorg will
continue working for the Group on the boards of the
Group's subsidiaries AS
Linnaehitus and AS Aspi.
Financial review
Margins
Eesti Ehitus Group ended 2008 with a
gross profit of 357.8 million kroons (22.9
million euros), a 28.4 per cent
decrease from the 499.9 million kroons (31.9
million euros) earned in
2007.
Consolidated net
profit for the year was 171.6 million kroons (11.0 million
euros).
Compared with the 289.8 million kroons (18.5 million euros) generated in
2007,
net profit decreased by 41 per cent. The decline results largely from a
downturn in the profitability of construction contracts and an increase in
income tax expense (27 million kroons or 1.7 million euros up on 2007),
triggered by the record dividends distributed in 2008 for strong
performance in
prior periods. In addition, net profit was adversely affected
by losses on
investments in the Ukrainian associates where the weakening
of the local
currency against the euro and the Estonian kroon gave
rise to additional
exchange losses on liabilities denominated in
foreign currencies.
The key profitability ratios monitored by
the Group's management weakened mostly
on account of adverse changes in the
operating environment. As anticipated,
margins were severely impacted by
the rapid economic recession and the ensuing
construction sector slump that
hit the Group's home markets. The main
sector-specific indicator of
change was the increasing excess of construction
capacities over the number
of projects on offer. Low demand that was
insufficient for meeting
the business needs of all market players triggered
increasing pressure
for lowering the prices. Although the gross margin slipped
from 13.3 per
cent in 2007 to 9.3 per cent, it remained within a range that is
strong in
the context of the industry and the current market situation. Owing to
the
above developments (including growth in dividend tax expense), the period's
operating and net margin also followed a downward trend, dropping to 5.4 per
cent and 4.4 per cent respectively (2007: 8.2 per cent and 7.7 per cent
respectively).
We have put a lot of effort in cost-cutting and despite the growth of
the Group
administrative expenses have not increased significantly. At period
end, the
ratio of administrative expenses to revenue was 4.7 per cent
(2007: 4.6 per
cent). The Group's management believes that in the context
of the industry the
figure refers to effective cost management that is
instrumental in improving
operating efficiency. We intend to maintain the
ratio of administrative expenses
to revenue at a similar level also in
subsequent periods.
Cash flows
Compared with the previous
year, the Group's net operating cash flow more than
doubled, rising from 147
million kroons (9.4 million euros) to 306 million
kroons (19.8 million
euros).
The Group has
been actively investing in new growth opportunities. Thus in 2008
a
significant portion of cash outflows from investing activities, i.e. 214.7
million kroons (13.7 million euros), was attributable to the acquisition of
subsidiaries and the business combinations of prior periods (the
acquisition of
AS Eston Ehitus in the last quarter of 2007). Compared with
2007 when investing
activities resulted in a net inflow of 10.7 million kroons
(0.7 million euros),
in 2008 investment activities heightened, giving rise to
a net outflow of 157.5
million kroons (10.1 million euros). The period's
inflows from investing
activities comprised mainly loan settlements
and proceeds from the disposal of
investments in associates.
The largest one-off outflow from
financing activities was related to the
distribution of dividends,
which at 104.1 million kroons (6.7 million euros)
were two times larger
than in the previous financial year. Financing activities
generated a net
outflow of 88.3 million kroons (5.6 million euros). In 2007, net
financing
outflow was 77.9 million kroons (5.0 million euros). The net amount of
loans
received and repaid in 2008 was positive at 106.0 million kroons (6.8
million euros) against 61.6 million kroons (3.9 million euros) the year
before.
In 2008, the Group's cash and cash equivalents increased by 60.1
million kroons
(3.8 million euros); in 2007 the corresponding rise was 80.1
million kroons (5.1
million euros).
At 31 December 2008, the Group's cash and cash
equivalents stood at 296.2
million kroons (18.9 million euros) against
236.1 million kroons (15.1 million
euros) at 31 December 2007. The growth in
net operating cash inflow and liquid
funds attests to the quality of the
Group's trade receivables and the Group's
financial capability in
subsequent periods.
Key financial
figures and ratios
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Figure / ratio | | 2008 | 2007 | 2006
|
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Weighted average number of | | 30,756,72 | 30,756,72 | 30,756,72
|
| shares | | 8 | 8 |
8
|
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Earnings per share (in kroons) | | 4.74 | 8.70 | 5.75
|
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Earnings per share (in euros) | | 0.30 | 0.56 | 0.37
|
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Revenue growth | | 3.1% | 49.9% | 49.5%
|
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Average number of employees | | 1,232 | 1,103 | 871
|
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Revenue per employee (in | | 3,139 | 3,402 | 2,875
|
| thousands of kroons) | | | |
|
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|
Revenue per employee (in | | 201 | 217 | 184
|
| thousands of euros) | | | |
|
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|
Personnel expenses to revenue, % | | 12.7% | 12.3% | 11.0%
|
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|
Administrative expenses to | | 4.7% | 4.6% | 5.0%
|
| revenue, % | | | |
|
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|
EBITDA (in thousands of kroons) | | 281,361 | 370,581 | 236,367
|
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|
EBITDA (in thousands of euros) | | 17,982 | 23,684 | 15,107
|
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|
EBITDA margin, % | | 7.3% | 9.9% | 9.4%
|
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Gross margin, % | | 9.3% | 13.3% | 12.2%
|
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Operating margin, % | | 5.4% | 8.2% | 8.2%
|
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|
Operating margin excluding gains | | 5.3% | 7.8% | 7.0%
|
| on asset sales, % | | | |
|
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|
Net margin, % | | 4.4% | 7.7% | 7.6%
|
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|
Return on invested capital, % | | 19.2% | 32.7% | 33.2%
|
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|
Return on assets, % | | 9.1% | 17.1% | 17.3%
|
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|
Return on equity, % | | 20.5% | 44.1% | 53.6%
|
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Equity ratio, % | | 36.4% | 36.9% | 35.8%
|
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Gearing, % | | 18.2% | 13.5% | 14.3%
|
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|
Current ratio | | 1.33 | 1.30 | 1.33
|
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As at 31 December | | 2008 | 2007 | 2006
|
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Order backlog (in thousands of | | 2,220,748 | 2,526,652 | 2,453,419
|
| kroons) | | | |
|
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|
Order backlog (in thousands of | | 141,932 | 161,482 | 156,802
|
| euros) | | | |
|
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*
For comparability, the weighted average number of shares is the number of
shares after the bonus issues.
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Earnings per share (EPS) = net | Operating margin excluding gains on
|
| profit attributable to equity | asset sales = (operating profit -
gains |
| holders of the parent / weighted | on sale of property, plant and
|
| average number of shares | equipment - gains on sale of
real |
| outstanding | estate) / revenue
|
| Revenue per employee = revenue / | Net margin = net profit
for the period |
| average number of employees | / revenue
|
| Personnel expenses to revenue = | Return on invested
capital = (profit |
| personnel expenses / revenue | before tax +
interest expense) / the |
| Administrative expenses to revenue | period's
average (interest-bearing |
| = administrative expenses / |
liabilities + equity) |
| revenue
| Return on assets = operating profit / |
| EBITDA = earnings before
interest, | the period's average total assets |
| taxes, depreciation
and | Return on equity = net profit for the |
| amortisation
| period /the period's average total |
| EBITDA margin =
EBITDA / revenue | equity |
| Gross margin
= gross profit / | Equity ratio = total equity / total |
| revenue
| equity and liabilities |
|
Operating margin = operating | Gearing = (interest-bearing liabilities
|
| profit / revenue | - cash and cash equivalents) /
|
| | (interest bearing liabilities +
equity) |
| | Current ratio = total current
assets / |
| | total current liabilities
|
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Revenue
distribution by geographical segments
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|
Geographical segment | 2008 | 2007 | 2006
|
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|
Estonia | 80.3% | 87.9% | 91.4%
|
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|
Ukraine | 11.4% | 11.6% | 8.6%
|
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|
Lithuania | 2.4% | 0.5% | 0%
|
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|
Latvia | 5.9% | 0% | 0%
|
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In
2008 revenue earned outside Estonia accounted for 20 per cent of
consolidated
revenue against 12 per cent in 2007. Above all, in 2008 we
expanded our
operations in Latvia and Lithuania. In terms of
percentages, Ukrainian revenues
remained more or less stable. Revenue
distribution across different geographical
segments is a consistently deployed
strategy aimed at mitigating the risks
arising from undue reliance on a
single market. In addition, increasing the
proportion of revenue earned
outside Estonia is one of the Group's strategic
objectives.
Business review
The core business
of Eesti Ehitus Group is general contracting and construction
management in
building construction and civil engineering. In addition, the
Group is
involved in road construction and maintenance, environmental
engineering, concrete works and real estate development.
Consolidated revenue for 2008 was 3,866.7 million kroons (247.1 million
euros),
a 3 per cent increase on the 3,752.0 million kroons (240 million
euros)
generated in 2007. Year-over-year revenue growth in a
situation where both the
domestic and foreign construction markets have
experienced adverse developments
underscores the success of prior-period
acquisitions.
The Group tries to maintain the
revenues generated by different segments in
balance as this helps
disperse risks and provides a more solid foundation under
stressed
circumstances when one segment experiences shrinkage on operating
volumes. In line with the Group's focus and strategy, the proportion of
residential development revenue is consistently maintained at a relatively
low
level (at or below 20 per cent).
In 2008, the residential and non-residential segment contributed
2,303.2 million
kroons (147.2 million euros) and the civil engineering segment
1,421.1 million
kroons (90.8 million euros) of total construction contract
revenue. The
corresponding figures for 2007 were 1,952.3 million
kroons and 1,772.7 million
kroons (124.8 million euros and 113.3 million
euros) respectively. The
year-over-year decrease in the revenue
generated by the civil engineering
segment results mostly from the
timing of major environmental and port
construction projects.
In 2008, revenue
distribution between the primary segments differed somewhat
from that of
the previous years. The residential and non-residential segment
generated
almost two thirds of total revenue whereas in prior periods the
contributions of the main segments were more even. The change results from
the
timing (launch and completion) of major contracts and the distribution
of the
order backlog at the beginning of the year (see Order backlog and
major
construction contracts signed in 2008 in the Directors'
report).
Management believes that because of the market
situation (see Future outlook in
the Directors' report) in 2009 the
circumstances will reverse and the proportion
of revenue generated by the
civil engineering segment will increase. The
assessment is supported
by the Group's order backlog as at 31 December 2008
where the contracts
of the civil engineering segment surpass those of the
residential and
non-residential segment (see Order backlog and major
construction
contracts signed in 2008 in the Directors' report).
In the
residential and non-residential segment, revenue distribution remained
similar to prior periods, with commercial buildings accounting for over 50
per
cent of the segment's revenue. In the civil engineering segment, the
contribution of other engineering projects has increased thanks to
growth in the
Group's Latvian operations. The decline in port construction
revenues is
attributable to a major project that was almost fully
performed in 2007 and did
not continue in 2008.
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|
Revenue distribution by | | | | |
|
| business segments | | | | |
|
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|
Business segment | | 2008 | 2007 | 2006 |
|
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|
Residential and | | 63% | 53% | 54% |
|
| non-residential | | | | |
|
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|
Civil engineering | | 37% | 47% | 46% |
|
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|
Revenue distribution in | | 2008 | 2007 | 2006
|
| the | | | |
|
| residential and | | | |
|
| non-residential segment | | | |
|
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|
Commercial buildings | | 59% | 61% | 41%
|
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|
Industrial and warehouse | | 16% | 11% | 24%
|
| facilities | | | |
|
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|
Public buildings | | 14% | 16% | 18%
|
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|
Residential buildings | | 11% | 12% | 17%
|
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|
Revenue distribution in the | | 2008 | 2007 | 2006*
|
| civil engineering segment | | | |
|
-----------------------------------------------------------------------------
---
|
Road construction and | | 45% | 41% | 58%
|
| maintenance | | | |
|
-----------------------------------------------------------------------------
---
|
Port construction | | 24% | 33% | 15%
|
-----------------------------------------------------------------------------
---
|
Other engineering | | 25% | 13% | -
|
-----------------------------------------------------------------------------
---
|
Environmental engineering | | 6% | 13% | 27%
|
-----------------------------------------------------------------------------
---
Order
backlog and major construction contracts signed in 2008
Order backlog
------------------------------------------------------------------------------
--
|
As at 31 December | | 2008 | 2007 | 2006
|
-----------------------------------------------------------------------------
---
|
Order backlog, in thousands of | | 2,220,748 | 2,526,652 | 2,453,419
|
| kroons | | | |
|
-----------------------------------------------------------------------------
---
|
Order backlog, in thousands of | | 141,932 | 161,482 | 156,802
|
| euros | | | |
|
-----------------------------------------------------------------------------
---
At
31 December 2008, the Group's order backlog was 2,221 million kroons (142
million euros), a 12 per cent decrease compared with the 2,527 million kroons
(161 million euros) posted a year ago.
In the civil engineering segment, the order backlog has been growing
compared
with prior periods since the first quarter of 2008. At period-end,
the backlog
of the civil engineering segment accounted for 59 per cent of
the Group's total
backlog portfolio (31 December 2007: 10 per cent),
reflecting the situation in
the construction market where the downturn in
the residential and
non-residential segment outpaces growth in
the civil engineering segment. The
growth in the Group's order backlog has
been significantly undermined by the
construction prices, which are
considerably lower than a year ago.
Major construction
contracts signed in the reporting period are listed below.
Major
construction contracts signed in 2008
------------------------------------------------------------------------------
--
|
Brief description | Cost | Country | Expected
|
| | | |
delivery |
| | (EEK '000/EUR | |
|
| | '000) |
|
|
-----------------------------------------------------------------------------
---
|
Rehabilitation of the Rõhu-Puhja | 92,336 / 5,901 | Estonia | August 2009
|
| section of national road no 92 | | |
|
-----------------------------------------------------------------------------
---
|
Construction of berths no 8 and 9 | 316,363 / | Estonia | May 2009
|
| at Paldiski South Harbour | 20,219 | |
|
-----------------------------------------------------------------------------
---
|
Design and construction of the | 179,100 / | Estonia | August 2010
|
| Science Centre AHHAA building | 11,447 | |
|
-----------------------------------------------------------------------------
---
|
Tarmeko KV interior decoration | 63,000 / 4,026 | Estonia | October
|
| store in Tartu | | |
2008
|
-----------------------------------------------------------------------------
---
|
Väike-Paala business building in | 101,500 / | Estonia | May 2009
|
| Tallinn | 6,487 | |
|
-----------------------------------------------------------------------------
---
|
Design and construction of the Mäo | 402,881 / | Estonia | August 2010
|
| overtake on the Tallinn-Tartu road | 25,749 | |
|
-----------------------------------------------------------------------------
---
|
Extension of water and sewerage | 194,242 / | Latvia | December
|
| networks in the Sempeteris district | 12,414 | |
2009 |
| in Riga | | |
|
-----------------------------------------------------------------------------
---
|
Extension of the Lõunakeskus | 284,270 / | Estonia | September
|
| shopping centre in Tartu | 18,168 | |
2009
|
-----------------------------------------------------------------------------
---
|
Construction of a leisure and | 112,398 / | Ukraine | May 2009
|
| shopping centre in the Darnitski | 7,184 | |
|
| district in Kiev | | |
|
-----------------------------------------------------------------------------
---
|
Stage one in the construction of | 279,760 / | Estonia | December
|
| the Koidula railway border station | 17,880 | |
2010 |
| (joint tender with Teede REV-2) | | |
|
-----------------------------------------------------------------------------
---
|
Construction of berth no 8 at | 79,000 / 5,049 | Estonia | October
|
| Virtsu Harbour | | |
2009
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
People
and personnel expenses
In
2008 the Group employed, on average, 1,232 people including more than 500
engineers. The proportion of engineers and technical personnel (ETP) has
increased over the past couple of years due to the growth of the Group and
the
size of the contracts. Compared with 2007 the number of staff has
increased by
approximately 100 mainly on account of the addition of the
Latvian company SIA
Abagars to the list of the Group's subsidiaries.
Number of employees:
------------------------------------------------------------------------------
--
|
Period | ETP | Workers | Total average
|
-----------------------------------------------------------------------------
---
|
2008 | 511 | 721 | 1,232
|
-----------------------------------------------------------------------------
---
|
2007 | 425 | 678 | 1,103
|
-----------------------------------------------------------------------------
---
|
2006 | 329 | 542 | 871
|
-----------------------------------------------------------------------------
---
The
Group's personnel expenses for 2008, including associated taxes, totalled
489.6 million kroons (31.3 million euros), a 6 per cent increase on the 461.4
million kroons (29.5 million euros) incurred in 2007. The growth in
personnel
expenses is attributable to the acquisition of subsidiaries and
the Group's
remuneration policy (including the award of
performance-related consideration).
However, the ratio of personnel expenses
to revenue has risen modestly - from
12.3 per cent in 2007 to 12.7 per cent
in 2008.
In 2008, the remuneration of the
Group's council, including associated taxes,
totalled 1,443 thousand kroons
(92 thousand euros) and the remuneration of the
Group's board, including
associated taxes, amounted to 14,582 thousand kroons
(932 thousand euros).
The respective figures for 2007 were 1,080 thousand kroons
(69 thousand euros)
and 15,557 thousand kroons (994 thousand euros)
respectively.
The share and
shareholders
----------------------------------------------------------------------------
----
|
ISIN code | EE3100039496
|
-----------------------------------------------------------------------------
---
|
Short name of the security | EEH1T
|
-----------------------------------------------------------------------------
---
|
Nominal value | 10.00 kroons / 0.64 euros
|
-----------------------------------------------------------------------------
---
|
Total number of securities | 30,756,728
|
-----------------------------------------------------------------------------
---
|
Number of listed securities | 30,756,728
|
-----------------------------------------------------------------------------
---
|
Listing date | 18 May 2006
|
-----------------------------------------------------------------------------
---
Shareholder
structure
The
largest shareholders of AS Eesti Ehitus at 31 December 2008:
------------------------------------------------------------------------------
--
|
Shareholder | Number of | Ownership
|
| | shares |
interest
|
-----------------------------------------------------------------------------
---
|
AS Nordecon | 18,807,464 | 61.15%
|
-----------------------------------------------------------------------------
---
|
ING Luxembourg S.A. | 1,111,853 | 3.62%
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | 678,960 | 2.21%
|
-----------------------------------------------------------------------------
---
|
ASM Investmets OÜ | 519,600 | 1.69%
|
-----------------------------------------------------------------------------
---
|
JP Morgan Chase Bank/ Dekabank Deutche | 500,000 | 1.63%
|
| Girozentrale | |
|
-----------------------------------------------------------------------------
---
|
Skandinaviska Enskilda Banken Ab | 456,758 | 1.49%
|
| Clients | |
|
-----------------------------------------------------------------------------
---
|
Central Securities Depository of | 397,488 | 1.29%
|
| Lithuania | |
|
-----------------------------------------------------------------------------
---
|
State Street Bank & Trust Co. | 355,199 | 1.15%
|
-----------------------------------------------------------------------------
---
|
The Bank of New York Mellon | 353,323 | 1.15%
|
-----------------------------------------------------------------------------
---
|
Clearstream Banking Luxembourg S.A. | 339,910 | 1.11%
|
| Clients | |
|
-----------------------------------------------------------------------------
---
|
Aivo Kont | 339,480 | 1.10%
|
-----------------------------------------------------------------------------
---
|
Raul Rebane | 316,104 | 1.03%
|
-----------------------------------------------------------------------------
---
Shareholder
structure at 31 December 2008 according to the Estonian Central
Register
of Securities:
------------------------------------------------------------------------------
--
|
| Number of | Ownership
|
| | shareholders |
interest
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest | 1 | 61.15%
|
| exceeding 5% | |
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest between | 11 | 17.47%
|
| 1% and 5% | |
|
-----------------------------------------------------------------------------
---
|
Shareholders with interest below | 1,627 | 21.38%
|
| 1% | |
|
-----------------------------------------------------------------------------
---
|
Total | 1,639 | 100.00%
|
-----------------------------------------------------------------------------
---
Shares
controlled by members of the council and board of AS Eesti Ehitus at 31
December 2008:
------------------------------------------------------------------------------
--
|
| | Number of | Ownership
|
| | | shares |
interest
|
-----------------------------------------------------------------------------
---
|
Toomas Luman | Chairman of the | 18,959,144 | 61.64%
|
| (AS Nordecon, OÜ Luman | Council | |
|
| ja Pojad)* | | |
|
-----------------------------------------------------------------------------
---
|
Ain Tromp | Member of the | 678,960 | 2.21%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Alar Kroodo | Member of the | 519,600 | 1.69%
|
| (ASM Investments OÜ)* | Council | |
|
-----------------------------------------------------------------------------
---
|
Andri Hõbemägi | Member of the | 34,000 | 0.11%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Tiina Mõis | Member of the | 0 | 0.00%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
|
Meelis Milder | Member of the | 0 | 0.00%
|
| | Council | |
|
-----------------------------------------------------------------------------
---
*
Companies controlled by the individual.
----------------------------------------------------------------------------
----
|
| | Number of | Ownership
|
| | | shares |
interest
|
-----------------------------------------------------------------------------
---
|
Jaano Vink | Chairman of the | 34,000 | 0.11%
|
| | Board | |
|
-----------------------------------------------------------------------------
---
|
Sulev Luiga | Member of the | 1,000 | 0.00%
|
| | Board | |
|
-----------------------------------------------------------------------------
---
|
Priit Tiru | Member of the | 0 | 0.00%
|
| | Board | |
|
-----------------------------------------------------------------------------
---
Auditors
and advisors
Based
on a resolution of the general meeting of the shareholders, the auditor of
the
Group's significant subsidiaries and sub-groups is KPMG Baltics AS with
whom
the Group has an agreement for the audit of the financial statements for
2008,
2009 and 2010.
In other areas (valuation of assets, performance of due diligence
procedures,
etc), the Group relies on the services of recognised
professional advisors. The
advisor is selected by a tender.
Risks
Business risks
To manage their daily construction
risks, Group companies purchase Contractors'
All Risks insurance. Depending
on the nature of the project, both general frame
agreements and specially
tailored project-specific contracts are used. In
addition, as a rule,
subcontractors are required to secure the performance of
their obligations
with a bank guarantee issued for the benefit of AS Eesti
Ehitus. To
remedy builder-caused deficiencies which may be detected during the
warranty
period, all Group companies create warranty provisions. At the end of
2008,
the provisions (including current and non-current ones) totalled 14.6
million kroons (0.93 million euros). The corresponding figure for 2007 was
16.8
million kroons (1.1 million euros).
Credit risk
For credit risk management, a potential customer's settlement
behaviour and
creditworthiness are analysed already in the tendering
stage. Subsequent to the
signature of a contract, the customer's settlement
behaviour is monitored on an
ongoing basis from the making of an advance
payment to adherence to the
contractual settlement schedule, which
usually depends on the documentation of
the delivery of work performed. We
believe that the system in place allows us to
respond to customers' settlement
difficulties with sufficient speed. As at the
end of the reporting period,
our customers' settlement practice was good. In
accordance with the
Group's accounting policies, all receivables that are more
than 180 days
overdue are recognised as an expense.
In 2008,
income from the recovery of previously expensed receivables surpassed
losses
from the write-down of receivables by 9.5 million kroons (0.6 million
euros). In 2008 the Group has been consistent and effective in its debt
recovery
activities. As a result, at 31 December 2008 items of 17.3 million
kroons (1.1
million euros) which had been expensed in 2007 were classified
as recoverable.
Liquidity risk
Free funds are placed in overnight or fixed-interest
term deposits with the
largest banks in Estonia. To ensure timely
settlement of liabilities,
approximately two weeks' working capital
is kept in current accounts or
overnight deposits. Where necessary,
overdraft facilities are used.
At the reporting date, the
Group's current assets exceeded its current
liabilities 1.33-fold
(31 December 2007: 1.30) and available cash totalled 269.2
million kroons
(18.9 million euros) (31 December 2007: 236.1 million kroons or
15.1 million
euros). Together with unused overdraft facilities, the cash
balances
provide a sufficient liquidity buffer for conducting operations in an
economic environment which is more uncertain than last year.
Interest rate risk
The loans taken from the banks operating in Estonia, Latvia and Ukraine
have
mainly fixed interest rates. Finance lease contracts have floating
interest
rates and are linked to EURIBOR. Compared with the end of 2007
the Group's
interest-bearing loans and borrowings increased by 154.6
million kroons (9.9
million euros) year-over-year to 554.2 million kroons
(35.4 million euros).
Owing to the rise in loans and borrowings, interest
expense grew by 19.9 million
kroons (1.3 million euros) to 37.6 million kroons
(2.4 million euros).
Currency risk
As a rule, construction contracts and
subcontractors' service contracts are made
in the currency of the host
country: in Estonia contracts are made in Estonian
kroons (EEK), in Latvia
in Latvian lats (LVL), in Lithuania in Lithuanian litas
(LTL) and in Ukraine
in Ukrainian grivnas (UAH). A significant proportion of
services purchased
from other countries are priced in the euro, which does not
constitute a
currency risk for the Group's Estonian, Latvian and Lithuanian
entities.
In the
last quarter of 2008 the Ukrainian economy was seriously hit by the
global financial crisis. The exchange rate of the local currency which used
to
be pegged to the US dollar was deeply impacted by a decrease in exports
and
foreign investment and the general reliability of the Ukrainian
banking system.
Despite counter-measures the local central bank was unable to
maintain the
exchange rate of the Ukrainian grivna and by the reporting
date the latter had
weakened against the US dollar by more than 30 per cent.
The Group has incurred substantial exchange losses
on the euro-based loans
granted to its Ukrainian entities. Altogether,
the Group's foreign exchange
losses for 2008 totalled 29.6 million kroons
(1.9 million euros) against 11.2
million kroons (0.7 million euros) in
2007.
We have adopted various measures
to reduce losses from the weakening of the
grivna. Where possible, we
have fixed receivables in euros or have agreed
settlement terms that
take into account possible changes in the exchange rate of
the grivna against
the euro and the US dollar. As a result, we have been able to
recognise gains
on the revaluation of receivables (other operating income) of
37.2 million
kroons (2.4 million euros).
Future
outlook
Estonia
We believe that in the next few years the economic recession will trigger
the
following trends:
-The construction sector will become more dependent on public
procurement
tenders
and the number and pricing of infrastructure,
environmental and other projects
launched with the support of the European
Union funds (the latter will be
critically influenced by the
administrative capabilities of the state and local
governments).
-Housing development
and construction volumes will shrink and the number of
related companies will
decrease through consolidation. The consolidation process
will heighten
competition and companies, which used to focus on the construction
of
buildings, will move to other segments such as infrastructure construction,
which will increase competition in those segments.
-Owing to the global financial crisis, the private sector will have
greater
difficulty in financing new construction projects with debt capital.
This will
further reduce demand for construction services. The strong
setback may be
somewhat alleviated by a competition-induced decrease in
prices, which will
render investment in construction projects more
attractive than it was during
the boom of 2006 and 2007.
-Building materials manufacturers that
expanded capacities during the growth
phase of the market will be faced by
face shrinking demand and, consequently,
greater strain in meeting the
obligations taken for expansion.
Real estate developers'
ability to service and repay existing loans will weaken
and their
creditworthiness will decrease. For companies involved in general
contracting and project management, this may mean an increase in doubtful and
irrecoverable receivables.
-The importance of infrastructure projects will increase and,
accordingly,
critical success factors will include specialised engineering
expertise and
experience as well as the availability of relevant
resources.
-The past years' labour deficit in the
construction sector will decline and
growth in personnel expenses will
decelerate.
-Construction projects'
financing schemes will change (customers' settlement
terms will extend
significantly) and additional requirements to the financing
provided by
general contractors will impose pressure on the contractors'
liquidity
Eesti
Ehitus Group operates in line with its long-term objectives, which are
adjusted to changes in the external business environment. Relevant strategic
management is the responsibility of the Group's board.
The Group has prepared itself for changes in the economic environment
by
designing a project portfolio where risks are dispersed between
activities (the
proportion of residential construction does not exceed 20 per
cent of revenue)
and markets. We expect to maintain our position in the
Estonian market by
efficiently harnessing our core competencies
Latvia and Lithuania
The Latvian and Lithuanian construction
markets are influenced by an economic
environment that is similar to the
one prevailing in Estonia. In the near
future, the segments where the
Group's subsidiaries are represented will be
subject to the following
trends.
In Latvia the
volumes of infrastructure projects financed by the state and local
government
with the support of EU funding will remain stable or will increase.
Construction activities will be mainly affected by high inflation.
In Lithuania there are strong prospects for continuing the construction
of small
and medium-sized business and public buildings. The construction of
apartment
houses (the Group as a general contractor not a developer) will
decline. The
greatest risk is inflation and its impact on construction
prices.
The Group's management will remain alert to
developments in Latvia and Lithuania
because similarly to Estonia, their whole
economy is in difficulty and, in one
way or another, this will impact the
construction sector. The Group will focus
on sustaining organic growth in
Latvia and Lithuania, taking into consideration
changes in the external
environment. Significant growth in these markets can
only be achieved by
additional investment. In Latvia we have already started
this by acquiring
a new subsidiary SIA LCB (see Changes in the Group's structure
in 2008 in the
Directors' report).
Ukraine
In
Ukraine, the Group will continue acting as a general contractor and project
manager in the construction of commercial buildings and production
facilities.
Activities on development projects that require major investment
will probably
be suspended to lower the risks until the situation in the
Ukrainian and global
financial markets improves.
The main risks in the Ukrainian market are connected
with the low administrative
efficiency of the central and local government,
inflation and the availability
of quality construction inputs. Since October
2008 the Ukrainian monetary and
banking system has been under severe
pressure that has had a negative impact on
the Ukrainian economy, which has
been growing rapidly in recent years, and the
commencement of potential
construction and development projects. Nevertheless,
we are confident that
the construction market of a country with a population of
46 million will
offer attractive business opportunities also in the near
future.
Consolidated interim balance sheet
----------------------------------------------------------------------------
----
|
Unaudited | 31 December | 31 December
|
| EEK '000 | 2008 |
2007
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 296,184 | 236,112
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 462,210 | 511,819
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 424,049 | 264,551
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 384 | 1,905
|
-----------------------------------------------------------------------------
---
|
Inventories | 388,202 | 393,529
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 0 | 43,362
|
-----------------------------------------------------------------------------
---
|
Total current assets | 1,571,029 | 1,451,277
|
-----------------------------------------------------------------------------
---
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 113,484 | 111,686
|
-----------------------------------------------------------------------------
---
|
Investment property | 116,783 | 133,984
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 263,295 | 221,748
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 305,188 | 273,223
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 798,750 | 740,641
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 2,369,779 | 2,191,918
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 235,563 | 135,856
|
-----------------------------------------------------------------------------
---
|
Trade payables | 427,158 | 335,754
|
-----------------------------------------------------------------------------
---
|
Other tax liabilities | 66,754 | 53,777
|
-----------------------------------------------------------------------------
---
|
Income tax liability | 0 | 994
|
-----------------------------------------------------------------------------
---
|
Other payables and advances received | 440,227 | 574,722
|
-----------------------------------------------------------------------------
---
|
Provisions | 13,089 | 12,458
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 1,182,791 | 1,113,561
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 318,588 | 263,723
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 2,534 | 714
|
-----------------------------------------------------------------------------
---
|
Deferred income tax liability | 931 | 0
|
-----------------------------------------------------------------------------
---
|
Provisions | 1,508 | 4,328
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 323,561 | 268,765
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 1,506,352 | 1,382,326
|
-----------------------------------------------------------------------------
---
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Minority interest | 98,073 | 90,095
|
-----------------------------------------------------------------------------
---
|
Share capital | 307,567 | 307,567
|
-----------------------------------------------------------------------------
---
|
Share premium | 509 | 0
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 34,800 | 11,766
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -4,183 | 2,354
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 426,661 | 397,810
|
-----------------------------------------------------------------------------
---
|
Total equity attributable to equity | 765,354 | 719,497
|
| holders of the parent | |
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 863,427 | 809,592
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 2,369,779 | 2,191,918
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
-------------------------------------------------------------------
-------------
|
Unaudited | 31 December | 31 December
|
| EUR '000 | 2008 |
2007
|
-----------------------------------------------------------------------------
---
|
ASSETS | |
|
-----------------------------------------------------------------------------
---
|
Current assets | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents | 18,930 | 15,090
|
-----------------------------------------------------------------------------
---
|
Trade receivables | 29,541 | 32,711
|
-----------------------------------------------------------------------------
---
|
Other receivables and prepayments | 27,102 | 16,908
|
-----------------------------------------------------------------------------
---
|
Deferred tax assets | 25 | 122
|
-----------------------------------------------------------------------------
---
|
Inventories | 24,811 | 25,151
|
-----------------------------------------------------------------------------
---
|
Non-current assets held for sale | 0 | 2,771
|
-----------------------------------------------------------------------------
---
|
Total current assets | 100,407 | 92,754
|
-----------------------------------------------------------------------------
---
|
Non-current assets | |
|
-----------------------------------------------------------------------------
---
|
Long-term investments | 7,253 | 7,138
|
-----------------------------------------------------------------------------
---
|
Investment property | 7,464 | 8,563
|
-----------------------------------------------------------------------------
---
|
Property, plant and equipment | 16,828 | 14,172
|
-----------------------------------------------------------------------------
---
|
Intangible assets | 19,505 | 17,462
|
-----------------------------------------------------------------------------
---
|
Total non-current assets | 51,049 | 47,336
|
-----------------------------------------------------------------------------
---
|
TOTAL ASSETS | 151,456 | 140,089
|
-----------------------------------------------------------------------------
---
|
LIABILITIES | |
|
-----------------------------------------------------------------------------
---
|
Current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 15,055 | 8,683
|
-----------------------------------------------------------------------------
---
|
Trade payables | 27,300 | 21,459
|
-----------------------------------------------------------------------------
---
|
Other tax liabilities | 4,266 | 3,437
|
-----------------------------------------------------------------------------
---
|
Income tax liability | 0 | 64
|
-----------------------------------------------------------------------------
---
|
Other payables and advances received | 28,136 | 36,731
|
-----------------------------------------------------------------------------
---
|
Provisions | 837 | 796
|
-----------------------------------------------------------------------------
---
|
Total current liabilities | 75,594 | 71,170
|
-----------------------------------------------------------------------------
---
|
Non-current liabilities | |
|
-----------------------------------------------------------------------------
---
|
Interest-bearing loans and borrowings | 20,361 | 16,855
|
-----------------------------------------------------------------------------
---
|
Other liabilities | 162 | 46
|
-----------------------------------------------------------------------------
---
|
Deferred income tax liability | 60 | 0
|
-----------------------------------------------------------------------------
---
|
Provisions | 96 | 277
|
-----------------------------------------------------------------------------
---
|
Total non-current liabilities | 20,679 | 17,177
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES | 96,273 | 88,347
|
-----------------------------------------------------------------------------
---
|
EQUITY | |
|
-----------------------------------------------------------------------------
---
|
Minority interest | 6,268 | 5,758
|
-----------------------------------------------------------------------------
---
|
Share capital | 19,657 | 19,657
|
-----------------------------------------------------------------------------
---
|
Share premium | 33 | 0
|
-----------------------------------------------------------------------------
---
|
Statutory capital reserve | 2,224 | 752
|
-----------------------------------------------------------------------------
---
|
Translation reserve | -267 | 150
|
-----------------------------------------------------------------------------
---
|
Retained earnings | 27,269 | 25,425
|
-----------------------------------------------------------------------------
---
|
Total equity attributable to equity | 48,915 | 45,984
|
| holders of the parent | |
|
-----------------------------------------------------------------------------
---
|
TOTAL EQUITY | 55,183 | 51,742
|
-----------------------------------------------------------------------------
---
|
TOTAL LIABILITIES AND EQUITY | 151,456 | 140,089
|
-----------------------------------------------------------------------------
---
Consolidated
interim income statement
----------------------------------------------------------------------------
----
|
| Q4 2008 | Q4 2007 | 12 months | 12 months
|
| Unaudited | | | to 31 Dec | to 31
Dec |
| EEK '000 | | | 2008 |
2007
|
-----------------------------------------------------------------------------
---
|
Revenue | 945,036 | 1,092,613 | 3,866,733 | 3,752,028
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 899,262 | 939,558 | 3,508,950 | 3,252,051
|
-----------------------------------------------------------------------------
---
|
Gross profit | 45,774 | 153,055 | 357,783 | 499,977
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Marketing expenses | 1,795 | 1,266 | 8,007 | 5,106
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 45,376 | 57,286 | 182,730 | 173,562
|
-----------------------------------------------------------------------------
---
|
Other operating income | 45,435 | 7,787 | 63,960 | 16,411
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 14,268 | 25,829 | 22,336 | 30,256
|
-----------------------------------------------------------------------------
---
|
Operating profit | 29,770 | 76,461 | 208,670 | 307,464
|
-----------------------------------------------------------------------------
---
|
Finance income | 19,690 | 15,122 | 96,877 | 31,486
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 37,765 | 7,570 | 67,651 | 30,028
|
-----------------------------------------------------------------------------
---
|
Net finance items | -18,075 | 7,552 | 29,226 | 1,458
|
-----------------------------------------------------------------------------
---
|
Share of profit of equity | -2,181 | -737 | 17 | 856
|
| accounted investees | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 22,672 | 3,790 | 23,765 | 4,031
|
| accounted investees | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | -24,853 | -4,527 | -23,748 | -3,175
|
| loss of equity accounted | | | |
|
| investees | | | |
|
-----------------------------------------------------------------------------
---
|
Profit before income tax | -13,158 | 79,486 | 214,148 | 305,747
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -1,176 | -1,450 | 42,596 | 15,976
|
-----------------------------------------------------------------------------
---
|
Profit for the period | -11,982 | 80,936 | 171,552 | 289,771
|
-----------------------------------------------------------------------------
---
|
Attributable to: | | | |
|
-----------------------------------------------------------------------------
---
|
Equity holders of the | -9,722 | 71,172 | 145,754 | 267,482
|
| parent | | | |
|
-----------------------------------------------------------------------------
---
|
Minority interest | -2,260 | 9,764 | 25,798 | 22,289
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | -0.32 | 2.31 | 4.74 | 8.70
|
| (in kroons)* | | | |
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | -0.32 | 2.31 | 4.74 | 8.70
|
| share (in kroons)* | | | |
|
-----------------------------------------------------------------------------
---
*
For comparability, the weighted average number of shares used is the number
of
shares after the bonus issues, i.e. 30,756,728 shares.
--------------------------------------------------------------------------
------
|
| Q4 2008 | Q4 2007 | 12 months | 12 months
|
| Unaudited | | | to 31 Dec | to 31
Dec |
| EUR '000 | | | 2008 |
2007
|
-----------------------------------------------------------------------------
---
|
Revenue | 60,399 | 69,831 | 247,129 | 239,798
|
-----------------------------------------------------------------------------
---
|
Cost of sales | 57,473 | 60,049 | 224,263 | 207,844
|
-----------------------------------------------------------------------------
---
|
Gross profit | 2,925 | 9,782 | 22,867 | 31,954
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Marketing expenses | 115 | 81 | 512 | 326
|
-----------------------------------------------------------------------------
---
|
Administrative expenses | 2,900 | 3,661 | 11,679 | 11,093
|
-----------------------------------------------------------------------------
---
|
Other operating income | 2,904 | 498 | 4,088 | 1,049
|
-----------------------------------------------------------------------------
---
|
Other operating expenses | 912 | 1,651 | 1428 | 1,934
|
-----------------------------------------------------------------------------
---
|
Operating profit | 1,903 | 4,887 | 13,336 | 19,651
|
-----------------------------------------------------------------------------
---
|
Finance income | 1,258 | 966 | 6,192 | 2,012
|
-----------------------------------------------------------------------------
---
|
Finance expenses | 2,414 | 484 | 4,324 | 1,919
|
-----------------------------------------------------------------------------
---
|
Net finance items | -1,155 | 483 | 1,868 | 93
|
-----------------------------------------------------------------------------
---
|
Share of profit of equity | -139 | -47 | 1 | 55
|
| accounted investees | | | |
|
-----------------------------------------------------------------------------
---
|
Share of loss of equity | 1,449 | 242 | 1,519 | 258
|
| accounted investees | | | |
|
-----------------------------------------------------------------------------
---
|
Net share of profit and | -1,588 | -289 | -1,518 | -203
|
| loss of equity accounted | | | |
|
| investees | | | |
|
-----------------------------------------------------------------------------
---
|
Profit before income tax | -841 | 5,080 | 13,687 | 19,541
|
-----------------------------------------------------------------------------
---
|
Income tax expense | -75 | -93 | 2722 | 1,021
|
-----------------------------------------------------------------------------
---
|
Profit for the period | -766 | 5,173 | 10,964 | 18,520
|
-----------------------------------------------------------------------------
---
|
Attributable to: | | | |
|
-----------------------------------------------------------------------------
---
|
Equity holders of the | -621 | 4,549 | 9,315 | 17,095
|
| parent | | | |
|
-----------------------------------------------------------------------------
---
|
Minority interest | -144 | 624 | 1,649 | 1,425
|
-----------------------------------------------------------------------------
---
|
Basic earnings per share | -0.02 | 0.15 | 0.30 | 0.56
|
| (in euros)* | | | |
|
-----------------------------------------------------------------------------
---
|
Diluted earnings per | -0.02 | 0.15 | 0.30 | 0.56
|
| share (in euros)* | | | |
|
-----------------------------------------------------------------------------
---
*
For comparability, the weighted average number of shares used is the number
of
shares after the bonus issues, i.e. 30,756,728 shares.
Consolidated interim statement of cash flows
------------------------------------------------------------------------------
--
|
| EEK '000 | EUR '000
|
-----------------------------------------------------------------------------
---
|
| 12 months | 12 months | 12 | 12 months
|
| | to 31 Dec | to 31 Dec | months | to 31
Dec |
| | 2008 | 2007 | to 31 |
2007 |
| | | | Dec 2008 |
|
-----------------------------------------------------------------------------
---
|
Cash flows from operating | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Cash receipts from customers | 4,693,951 | 4,424,893 | 299,998 | 282,802
|
-----------------------------------------------------------------------------
---
|
Cash paid to suppliers | -3,809,07 | -3,820,82 | -243,444 | -244,195
|
| | 0 | 1 | |
|
-----------------------------------------------------------------------------
---
|
Cash paid to and for | -540,926 | -438,363 | -34,571 | -28,017
|
| employees | | | |
|
-----------------------------------------------------------------------------
---
|
Income taxes paid | -38,041 | -18,423 | -2,431 | -1,177
|
-----------------------------------------------------------------------------
---
|
Net cash from operating | 305,914 | 147,286 | 19,551 | 9,413
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from investing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of property, | -11,856 | -24,589 | -758 | -1,572
|
| plant and equipment | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of intangible | -929 | -4,418 | -59 | -282
|
| assets | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 11,294 | 17,539 | 722 | 1,121
|
| property, plant and equipment | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of subsidiaries | -214,652 | -9,225 | -13,719 | -590
|
-----------------------------------------------------------------------------
---
|
Cash acquired on acquisition | 4,056 | 25,661 | 259 | 1,640
|
| of subsidiaries | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 2,063 | 872 | 132 | 56
|
| subsidiaries | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of associates | -7,615 | -10,000 | -487 | -639
|
-----------------------------------------------------------------------------
---
|
Proceeds from sale of | 77,812 | 10,417 | 4,973 | 666
|
| associates | | | |
|
-----------------------------------------------------------------------------
---
|
Acquisition of other | 0 | -5,406 | 0 | -346
|
| investments | | | |
|
-----------------------------------------------------------------------------
---
|
Loans granted | -120,756 | -58,843 | -7,718 | -3,761
|
-----------------------------------------------------------------------------
---
|
Repayment of loans granted | 86,721 | 56,439 | 5,542 | 3,607
|
-----------------------------------------------------------------------------
---
|
Dividends received | 183 | 0 | 12 | 0
|
-----------------------------------------------------------------------------
---
|
Interest received | 16,142 | 12,295 | 1,032 | 786
|
-----------------------------------------------------------------------------
---
|
Net cash used in / from | -157,537 | 10,742 | -10,068 | 687
|
| investing activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash flows from financing | | | |
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
|
Proceeds from loans received | 415,558 | 196,635 | 26,559 | 12,567
|
-----------------------------------------------------------------------------
---
|
Repayment of loans received | -309,607 | -134,995 | -19,787 | -8,628
|
-----------------------------------------------------------------------------
---
|
Payment of finance lease | -56,517 | -64,729 | -3,612 | -4,137
|
| liabilities | | | |
|
-----------------------------------------------------------------------------
---
|
Dividends paid | -104,130 | -52,135 | -6,655 | -3,332
|
-----------------------------------------------------------------------------
---
|
Interest paid | -33,284 | -22,672 | -2,127 | -1,449
|
-----------------------------------------------------------------------------
---
|
Other settlements | -325 | 0 | -21 | 0
|
-----------------------------------------------------------------------------
---
|
Net cash used in financing | -88,305 | -77,896 | -5,644 | -4,978
|
| activities | | | |
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Net cash flow | 60,072 | 80,132 | 3,839 | 5,121
|
-----------------------------------------------------------------------------
---
---------------------------------------------------------------------------
-----
|
Cash and cash equivalents at | 236,112 | 155,980 | 15,090 | 9,969
|
| beginning of period | | | |
|
-----------------------------------------------------------------------------
---
|
Effect of exchange rate | -60 | -98 | -4 | -6
|
| fluctuations | | | |
|
-----------------------------------------------------------------------------
---
|
Increase in cash and cash | 60,132 | 80,230 | 3,843 | 5,128
|
| equivalents | | | |
|
-----------------------------------------------------------------------------
---
|
Cash and cash equivalents at | 296,184 | 236,112 | 18,930 | 15,090
|
| end of period | | | |
|
-----------------------------------------------------------------------------
---
Eesti
Ehitus is a group of construction companies whose core business is
general
contracting and construction management in the construction of
buildings and
infrastructures in Estonia, Latvia, Lithuania and Ukraine. In
addition, in
Estonia our companies act as independent contractors in road
construction and
maintenance, environmental engineering, the assembly of
reinforced concrete
elements, and the performance of cast-on-site concrete
works. The parent of
the Group is AS Eesti Ehitus, a company registered and
located in Tallinn,
Estonia. In addition to the parent company, there are more
than 20
subsidiaries in the Group. The consolidated revenue of the Group in
2007 was
3.8 billion kroons (240 million euros) and the consolidated net profit
was 290
million kroons (19 million euros). Eesti Ehitus Group employs more than
1,200
people. Since 18 May 2006, the company's shares have been quoted in the
main
list of the NASDAQ OMX Tallinn Stock Exchange.
1 EUR = 15.6466
EEK
Raimo Talviste
AS Eesti Ehitus
Head of Investor Relations
Tel: +372
615 4400
Email: raimo.talviste@eestiehitus.ee
www.eestiehitus.ee